REN-Redes Energeticas Nacionais

Earnings Release • Jul 29, 2021

Results Presentation 1H2021

29th July 2021

AGENDA

1. Overview of the period

2. Business performance

3 Closing remarks .

1. Overview of the period

KEY MESSAGES 1H2021

EBITDA reached €227.9M, a contraction of 3.9% (-€9.2M) YoY attributed to (1) a reduction in RAB remuneration (-€5.6M), motivated by the decrease in RAB (with an impact of -€3.7M) and in RoR (-€1.9M); (2) a smaller OPEX contribution (-€2.5M), partially offset by a higher incentive for economic efficiency of investments (+€0.9M).

International business performance had a negative delta of €1.3M, of which €1.1M attributed to Electrogas.

Net Profit amounted to €39.5M, due to (1) a positive contribution from Financial results (increase of €3.4M to -€18.0M), a consequence of the decrease of the cost of debt (from 1.9% to 1.6%); and (2) a lower energy levy (+€1.1M) recognized in 1Q21.

Capex grew by €18.7M vs 1H20 to €79.3M, while transfers to RAB increased by 7.3M€ to €16.9M. There were some delays in transfers to RAB due to the COVID pandemic but that should be concluded by year-end.

Renewable energy sources (RES) reached 68.1% of total supply (approx. +4 p.p. than in 1H20). Consumption of electricity and natural gas increased as well as the amount of natural gas distributed.

Quality of service was stellar, for both electricity and NG, with 0.00 min of electricity interruption time, and natural gas combined availability rate at approximately 100%.

REN remains committed to the UN's Sustainable Development Goals, its efforts have not only already been recognized by ESG rating agencies, but also throughout this year, there has been several events such as, the Green bond issue and the Capital Markets day reinforcing this commitment to ESG.

SECTOR OVERVIEW

The Energy Transition is at the center of the Portuguese Government agenda

New regulatory period for the electricity sector

Gas Distribution Network Development Plans 2021-25

ERSE launched a public consultation with proposals to revise the Tariff Regulation for the electricity sector, with the aim of updating the regulatory mechanisms and methodologies related to the tariff structure and the allowed revenues model for the regulated activities, to be applied over the next regulatory period , from 2022 onwards

According to ERSE, the proposed changes provide a flexible regulatory framework, in order to respond to the challenges of decarbonisation and decentralization of the electricity sector. In this sense, it is worth highlighting the proposal of a TOTEX regulation, applied to the transmission (VHV) and distribution (HV and MV) activities

• Public consultation on the Gas Distribution Network Development Plans for the period 2021-25. ERSE concluded that the proposed investments do not result in tariff increases in 2025 and that there are quite different risk levels between the PDIRD-GN 2020 proposals of the different DSOs, leaving the final decision over these differences to the Government discretion, to approve part or all of the investment projects proposed by each DSO.
• ERSE considers relevant the concern of the DSO's to introduce pilot projects in their PDIRD-GN 2020 proposals, with the objective of obtaining information and expertise in the of decarbonized gases injection, namely hydrogen, in the distribution networks.

• Natural Gas annual capacity auctions
• The yearly send-out capacity auction that took place last week resulted again in the complete allocation of the Terminal send-out capacity with a price premium of 1% over the regulated tariff.

During the month of June, ERSE promoted an auction for placing electricity from Special Regime Production and an auction for the acquisition of energy by the Last Resource Supplier. The total contract volume sold is equivalent to 872 355 MWh in the 39th PRE Auction and 110 430 MWh in the 8th Last resource supplier Auction, with an weighted average final price of: 87,78 EUR/MWh and 91,26 EUR/MWh, respectively.

2. Business performance

BUSINESS HIGHLIGHTS

Superior quality of service in Portugal, albeit an increase in demand and a higher share of renewables

Electricity	Consumption	Energy transmission losses	Line length
	0.8 TWh 24.6TWh (3.2%)	2.1% 0.1pp	36km 9,038km (0.4%)
	1H20: 23.8TWh	1H20: 2.0%	1H20: 9,002km
	Renewables in consumption supply	Average interruption time
	68.1% 3.7pp	0.03min 0.00min (100.0%)
	1H20: 64.4%	1H20: 0.03min
Gas Transmission	Consumption	Combined availability rate	Line length
	1.5TWh 31.6TWh (5.1%)	99.9% 0.11pp	0km 1,375km (0.0%)
	1H20: 30.0TWh	1H20: 100.0%	1H20: 1,375km
Gas Distribution	Gas distributed	Emergency situations with response time up to 60min	Line length
	0.4TWh 4.1TWh (10.9%)	98.2% 1.0pp	225km 5,977km (3.9%)
	1H20: 3.7TWh	1H20: 99.2%	1H20: 5,752km

FINANCIAL HIGHLIGHTS

Positive contribution from Financial Results and solid improvement in Net Debt, nonetheless EBITDA and Net Profit declined

EBITDA contribution by

EBITDA reduction mostly due to lower RAB, remuneration rates and greater OPEX costs

EBITDA evolution breakdown €M

1 Includes Apolo SpA and Aerio Chile SpA costs | 2 Includes amortizations recovery, subsidies amortization, REN Trading incentives, telecommunication sales and services rendered, interest on tariff deviation, consultancy revenues and other services provided, OMIP and Nester results | 3 Excludes the segment "Other", which includes REN SGPS, REN Serviços, REN Telecom, REN Trading, REN PRO and REN Finance B.V. | 4 Refers to Portgás

1H21 RESULTS 9

Return on RAB stable relatively to last year, with regulatory WACC at the set floor

Portuguese 10Y Treasury Bond Yields % Base Return on RAB (RoR)* %

Transfers to RAB and CAPEX increased despite the ongoing pandemic

Transfers to RAB €M

Capex €M

Key highlights

Electricity

Main investment projects:

• New 60 kV bay at Castelo Branco substation, to reinforce the transmission grid;
• New 400 kV Fundão Falagueira axis through the extension of the current Falagueira - Castelo Branco line to Fundão and construction of a new 400/200kV substation
• The installation of new composite insulators on the Carregado Fanhões 2 overhead line, at 220 kV, as well as anti-corrosion protection.

Gas Transmission

Main investment projects:

Pipeline Network: GRMS heating systems and safety valves replacement as this equipment was at the end of its useful life

Gas Distribution

• Steady developments on the network expansion and densification, aiming at reaching new points of consumption (B2C)
• B2B is perceived as an anchor for network development, with 32 more clients connected in 1h2021 and constantly searching for ways to reinforcing it through mass market connections
• Licensing of 3 big projects with Capex execution expected to occur in 2H 2021

Decrease in RAB in most asset categories with Gas distribution being the exception

Average RAB evolution €M

RAB remuneration decreased across all businesses, but more sharply in electricity, driven by the decrease in the asset base

Return on RAB evolution breakdown €M

Return on RAB fell due to a smaller asset base (by €112.7M to €1,925.3M) and lower rate of return on assets with and without premium¹

Decline in Return on RAB attributed to a smaller asset base (by €42.3M to a total of €911.2M) and a lower RoR of 4.52% (-12bps)

OPEX increased by 8.9% YoY, with core OPEX rising 9.2%

Key highlights

Core external costs

• Consultancy services and other 3rd party services (+€1.5M), mostly related to strategic plan and bond issuance
• Insurance costs (+1.0M€)
• Electricity costs (+0.9M€) in LNG terminal

Non-core costs

• Pass-through costs (costs accepted in the tariff) increased by €1.3M, of which €0.7M correspond to costs with cross-border and system services costs and 1.0M€ to cost with NG transportation

INTERNATIONAL BUSINESS

Solid performance in Chile despite lower revenues

Contribution to Capex 1H21 €M

Key highlights

Transemel, Chile

Revenues decreased YoY mainly driven by the negative impact of the ongoing tariff review and delays in transfers to operation

Electrogas, Chile

EBITDA decreased YoY, driven by the end of the take-or-pay contract with Colbún in March of 2021 and lower available capacity of Argentinian gas

1H20: €16.8M Revenues €13.4M €3.4M (20.4%)

Strong improvement in Financial Results, as the cost of debt maintained its decreasing trend

Effective tax rate reached 40.8%, a 3.5 p.p. increment relatively to 1H20 (including the levy)

Increase in the effective tax rate vs 1H20 reflecting the different gains with the recovery of previous years taxes in 1H20 (€4.7M) and 1H21 (€2.3M)

Net Profit decreased as a result of lower EBITDA, partially offset by higher financial results

Net profit evolution breakdown €M Key highlights

• The Positive effect of €3.4M from Financial Results as a consequence of better market conditions and higher dividends from associates (Δ€1.3M)
• Lower CESE charges (Δ€- 1.1M), reflecting the reduction of the asset base
• Decrease in tax recovery from previous years (Δ€-2.4M)

Net Debt improvement due to a higher operating cash flow and positive tariff deviations

1 Calculated as Net Debt plus Cash, bank deposits and derivative financial instruments (€323M), excluding effects of hedging on yen denominated debt, accrued interest and bank overdrafts | 2 Includes loans (5.7%) and leasing (0.2%) | 3. Includes amounts received from the Fund for Systemic Sustainability of the Energy Sector (FSSSE)

1H21 RESULTS 18

SHARE PRICE & SHAREHOLDER RETURN

The share price moved in line with the Portuguese index

Annualized closing prices %

Analyst recommendations¹

Average Price target
€2.60	€0.19 (6.8%)
1H20: €2.79

3. Closing remarks

CLOSING REMARKS

Focus on strengthening of financials and a sustainable shareholders return

As expected, EBITDA was lower as a result of reduction in RAB remuneration, which was driven by a decrease in both RAB and remuneration rates, as well as a downturn in OPEX contribution.

Net Profit stood at €39.5M mainly because of the EBITDA performance. Nevertheless, the positive impact from Financial Results mitigated this decline.

A lower Net debt was the result of a higher operating cash flow and tariff deviations surpassing the outflows resulting from investment and financing activities.

On the 14th of May REN hosted its Capital Markets Day where it presented its strategy for the 2021-2024 period focused on energy transition and an unwavering objective of achieving carbon neutrality by 2040.

The 2021-2024 Strategic Plan also provides guidance on the company's financing policy that will increasingly be focused on green bonds.

This presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation do not constitute, or form part of, a public offer, private placement or solicitation of any kind by REN, or by any of REN's shareholders, to sell or purchase any securities issued by REN and its purpose is merely of informative nature and this presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation may not be used in the future in connection with any offer in relation to securities issued by REN without REN's prior consent.

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Ana Fernandes – Head of IR Alexandra Martins Telma Mendes José Farinha

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